Renewable-energy engineering, procurement and construction services group juwi Renewable Energies expects the commercial solar market in South Africa to undergo a significant shift in the coming months as independent power producers (IPPs) begin playing a more prominent role.
MD Greg Austin says the market has hitherto been characterised mostly by direct sales to corporates or property developers, which have invested in rooftop or ground-mounted systems to bolster security of supply, reduce costs or improve their environmental performance.
juwi itself has participated in the development of three commercial projects, the most recent being a 960 kW rooftop solar photovoltaic (PV) plant at Growthpoint’s Brooklyn Mall, in Pretoria. The installation of 9 600 thin-film modules is nearing completion and the system is expected to enter commercial operation in mid-April.
The company has also installed a rooftop system at the Northgate Mall, as well as a ground-mounted titled single-axis facility at the Council for Scientific and Industrial Research’s campus, in Pretoria.
However, Austin says that the next wave of developments is likely to be led by IPPs, which are pursuing a pipeline of opportunities, mostly in Gauteng and the Western Cape, but also in the Eastern Cape and KwaZulu-Natal. “As the costs of these projects fall, we can go into lower irradiation areas.”
He estimates the size of the commercial market to stand at around 200 MW from 2017, with a current installed base of around 300 MW. juwi is actively pursuing a 50 MW pipeline, mostly in partnership with IPPs. “We are confident of securing another 5 MW in the commercial space during 2017.”
Interest in such projects has persisted, despite the restoration of supply stability in South Africa, with projects now being pursued primarily for their economics. “A year ago, it was all about beating the municipal tariff. But we have so undershot the tariff that projects are being pursued purely for commercial reasons.”
Outside South Africa, juwi is also actively pursuing several projects in the rest of the sub-Saharan Africa region, particularly those associated with greenfield or brownfield mining projects, where hybrid solutions are likely to be more competitive than standalone diesel generators.
The company is using a 10.6 MW solar, 6 MW battery and 19 MW heavy fuel oil (HFO) hybrid plant development at the DeGrussa copper-gold mine, in Australia, to showcase the advantages of such solutions and Austin is confident of clinching a deal this year for a solar PV, HFO hybrid plant proposed at a gold mine in West Africa.
Besides the large government-backed programmes for utility-scale projects in South Africa and the rest of Africa, juwi is focusing on off-grid and hybrid projects in the rest of sub-Saharan Africa.
Despite these opportunities, however, the company sees South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) as a key market, notwithstanding recent delays brought about by State-owned power utility Eskom’s refusal to sign power purchase agreements (PPAs) for projects procured during the fourth bid window.
juwi has been involved with five REIPPPP-related solar PV projects, with a combined capacity of 121 MW, and is eager to see the signing of the PPA on the 138 MW Garob wind farm that juwi developed and which was procured during the fourth bid window. There have been signals that the project could reach financial close this month, following President Jacob Zuma’s State of the Nation pronouncement that Eskom would buy power from renewables projects already procured under the REIPPPP.
Nevertheless, juwi and others in the sector are paying close attention to whether Zuma’s decision to reshuffle his Cabinet – replacing Energy Minister Tina Joemat-Pettersson with Mmamoloko Kubayi in the process – will have any implications for the projects.
“We believe there is a strong economic case for proceeding with the round four projects, which will result in an additional R50-billion-worth of direct investment in South Africa’s energy sector,” Austin concludes.